19. Provisions
The Group’s provisions mainly relate to dismantling costs, warranties, restructuring programmes as well as legal and regulatory matters.
Composition of provisions
(In € million) |
|
Dismantling |
|
Product warranty |
|
Restructuring |
|
Other |
|
Total |
|---|---|---|---|---|---|---|---|---|---|---|
Carrying amount as of 1 January 2021 |
|
12.9 |
|
9.6 |
|
3.9 |
|
6.2 |
|
32.6 |
Additions through business combination |
|
– |
|
0.7 |
|
– |
|
0.2 |
|
0.9 |
Sale of subsidiary |
|
– |
|
(0.3) |
|
(9.6) |
|
(1.8) |
|
(11.7) |
Provisions made |
|
1.8 |
|
7.1 |
|
39.6 |
|
1.9 |
|
50.4 |
Provisions used |
|
(0.4) |
|
(2.5) |
|
(10.4) |
|
(2.4) |
|
(15.7) |
Provisions reversed |
|
– |
|
(6.0) |
|
(13.6) |
|
(0.3) |
|
(19.9) |
Effect of movements in exchange rates |
|
0.2 |
|
– |
|
– |
|
– |
|
0.2 |
Carrying amount as of 31 December 2021 |
|
14.5 |
|
8.6 |
|
9.9 |
|
3.8 |
|
36.8 |
Current |
|
– |
|
8.6 |
|
9.4 |
|
1.1 |
|
19.1 |
Non-current |
|
14.5 |
|
– |
|
0.5 |
|
2.7 |
|
17.7 |
Carrying amount as of 31 December 2021 |
|
14.5 |
|
8.6 |
|
9.9 |
|
3.8 |
|
36.8 |
Carrying amount as of 1 January 2022 |
|
14.5 |
|
8.6 |
|
9.9 |
|
3.8 |
|
36.8 |
Additions through business combinations |
|
– |
|
1.0 |
|
– |
|
16.0 |
|
17.0 |
Provisions made |
|
1.5 |
|
6.9 |
|
5.3 |
|
1.5 |
|
15.2 |
Provisions used |
|
(0.1) |
|
(1.5) |
|
(10.9) |
|
(0.9) |
|
(13.4) |
Provisions reversed |
|
– |
|
(7.1) |
|
(0.4) |
|
(0.3) |
|
(7.8) |
Effect of movements in exchange rates |
|
0.2 |
|
0.3 |
|
0.2 |
|
(0.8) |
|
(0.1) |
Carrying amount as of 31 December 2022 |
|
16.1 |
|
8.2 |
|
4.1 |
|
19.3 |
|
47.7 |
Current |
|
– |
|
7.9 |
|
3.2 |
|
15.5 |
|
26.6 |
Non-current |
|
16.1 |
|
0.3 |
|
0.9 |
|
3.8 |
|
21.1 |
Carrying amount as of 31 December 2022 |
|
16.1 |
|
8.2 |
|
4.1 |
|
19.3 |
|
47.7 |
Restructuring provision
The Group has a small number of ongoing restructuring programmes. The Group’s restructuring programmes are generally focused on reducing costs, streamlining the organisation and adjusting headcount to be more closely aligned with the Group’s needs and changing market demands. The main portion of the restructuring provision as of 31 December 2021 related to the closure of the Group’s Australian sleeves manufacturing operations. Payments are usually expected to be executed within the next one or two years. For further details, see note 9.
Other provisions
Other provisions mainly relate to legal and regulatory matters.
Accounting policy
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be reliably estimated and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are discounted if the time value of money is material. The unwinding of the discount is recognised as part of finance expenses. A provision is classified as current or non-current depending on whether the expected timing of the payment of the amounts provided for is more than 12 months after the reporting date.
A provision for dismantling is recognised when the Group has an obligation to pay for dismantling costs arising upon the return of a filling line and other related equipment. This obligation typically arises upon deployment of aseptic carton filling lines (see also note 12). As such, the majority of the obligations are non-current.
A provision for warranties is recognised for products under warranty as of the reporting date based upon known failures and defects as well as sales volumes and past experience of the level of problems reported and products returned. Warranty claims are expected to be settled within 12 months.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been publicly announced. The provision only includes direct costs that are necessarily entailed by the restructuring and not associated with ongoing activities. No provision is made for future operating costs.
A provision for onerous contracts is recognised when the benefits expected to be derived by an entity from a contract are lower than the unavoidable cost of meeting its obligations under the contract.
A provision for legal and regulatory matters reflects management’s best estimate of the outcome based on the facts known as of the reporting date.